Daily, weekly, monthly, and annually, every ASC needs to track key performance indicators (KPIs).
“Is it happening daily, weekly, monthly in every surgery center? No, you get busy in the hustle and bustle,” says Jocelyn C. Gaddie, vice president of business development for In2itive Business Solutions in Overland Park, KS. “If you want to be successful, you have to track these things. It’s kind of like a disciplinary action. You won’t see a lot of changes on a day-to-day basis, but if you track regularly, on a daily basis, then you will see things stand out and you can mitigate them quickly.”
Tracking KPIs keeps surgery center staff accountable and motivated. If the indicators demonstrate success, then everyone wins, she says. Surgery centers could direct a business office manager or administrator to collect KPIs.
“The lifeblood of a company is cash,” Gaddie notes. “If you are evaluating these KPIs on a daily, weekly, and monthly basis, you are going to have a successful surgery center. You will be ahead of the game with revenue coming in.”
ASC administrators might think they do not have time to collect KPIs. However, if managed regularly, collecting KPIs can lead to success and make goal-setting simplified for staff.
“Key performance indicators make it clear what our expectations are and what we’re working for,” Gaddie says. “We all want to work and succeed, and measuring KPIs is a great way to do that.”
There are several KPIs an ASC could collect, including the following:
• Aged accounts receivable (AR) older than 60 days. “You want to look at your aging AR on a monthly basis,” Gaddie says. “You want the aged AR over 60 days to be less than 25% of your AR.”
If there are too many old ARs, then the ASC can study the data to understand why. Problems might include sending claims in a timely manner, conducting quality follow-up, sending proper information to payers, denials from front-end processes, and entering incorrect demographic or insurance information.
“The longer your money sits out on your aging AR, the harder it is to collect,” Gaddie warns.
ASCs could try different tactics to resolve problems. For instance, they could follow up a delayed payment with a paper claim to move the process more quickly.
“Maybe there’s a new process that needs to be put in place so those claims are not denied and are paid quicker,” Gaddie says.
• Aged AR older than 120 days. Fewer than 10% of AR should be older than 120 days. Surgery center leadership should be worried if that percentage is higher, according to Gaddie.
When looking at this indicator, identify any payer-specific issues, such as clearinghouse rejections. Some surgery centers will submit claims through a clearinghouse to reach payers. They code a case, enter charges, click a button, and that sends data to the clearinghouse to send to payers, who pay according to the contract, Gaddie explains.
“Clearinghouse problems could [include] a claim submitted incorrectly with the wrong payer attached or incorrect information submitted with the claim,” she says. One possible reason for late payments is the paper process. Electronic payments arrive more quickly and are processed faster.
“If you can set those up electronically through your clearinghouse, you will see your payments that much faster,” Gaddie adds.
• Days in AR. For this KPI, surgery centers will want to look at data showing how quickly they are paid. “The industry standard is below 30 days,” Gaddie says. “Just how quickly can you get paid for the net revenue that you have billed out?”
Surgery centers also should track their net revenue that is billed out. “A clean claim equals a faster payment,” Gaddie says.
ASCs should use those numbers to calculate how quickly their money is coming in and how many days they are in accounts receivable, she adds. “You can calculate that number by your average last three months net collections, divided by your ending AR, to calculate your days in accounts receivable.”
There are variables to keep in mind. For example, government payers typically pay quickly, but workers’ compensation payers pay slowly. A surgery center’s KPI of days in AR partly depends on its payer mix.
• Net collection percent. The net collection percent should be 95% or higher, Gaddie says. “Basically, that’s your net collection divided by your net revenue,” she says. “Net revenue is your actual dollars.”
This KPI should be observed over a 12-month period to determine an average, rather than looking only at one month, which could be an outlier. For example, there could be heavy orthopedic surgeries that month or a higher-dollar caseload that month, Gaddie observes. If an ASC’s net collection is below 95%, then the surgery center needs to capture revenue better. “Look at the insurance side and patient side. Are you educating those patients up front, letting them know what kind of service you provide and what the expectations are?” Gaddie says.
Patients need to be aware that payment is due at the time of service. “If you educate patients as to what is expected, then they’re more likely to arrive for surgery, ready to pay, and you don’t have to chase that money on the back end,” Gaddie explains. “Make sure there are good, clear processes on the billing cycle to get those claims submitted clean.”
• Bad debt as a percent of net revenue. Bad debt should be less than 1% of net revenue, Gaddie says.
“We don’t want to write off any more than 1% of actual revenue each month,” she adds. “These can include denied claims that missed timely filing.”
Typically, insurance carriers will only allow a claim to be submitted within a set period, such as 90 days. If the claim is not submitted correctly, then they will not accept it and pay.
“You need to understand time restrictions with all payers so you don’t have to write off an account,” Gaddie says. “Another way to prevent this from happening is making sure you verify patient benefits prior to the time of service.”
ASCs should make sure patients have benefits that are on file. A center should not perform a procedure and then find out it is not covered. This could lead the center to have to write off the entire procedure since staff did not collect the correct information prior to the service, Gaddie adds.
• Clean claim rates. “We want 98% clean claim rates,” Gaddie says. The best way to make sure claims meet that KPI is by tracking and following claims monthly. Someone should track front office errors, demographics issues, whether authorizations are on file, incorrect patient identifiers, or expired eligibility, Gaddie explains.
Other items to track for this KPI include coding errors, lack of specificity, incorrect bundling of codes, non-utilized fees, incorrect codes, billing errors, untimely filing, missed appeals deadline, duplicate claims, and out-of-network claims.
“Trend those denials and report on those denials each month,” Gaddie suggests. “Where are they coming from: the front office, coding, or the back office? Walk through the steps to figure out what the issue is so you can eliminate that problem.”
• Days to bill. The industry standard is five days to send a claim. “We always want 24 to 48 hours of receiving reports,” Gaddie says. “Common sense says the quicker the claim can go out the door, the quicker we can get paid,” she says. “You want to code the claim within 24 hours of receiving the operation report, and you want charges entered that day, if possible, or at least the next day.”
This is a KPI that should be tracked daily, measured weekly, and acted on monthly, Gaddie says.
• Statement lag. This KPI refers to how often a surgery center’s statements are sent. “The industry standard is five days or less,” Gaddie says.
“We feel confident that your statement should go out on a daily basis. Once the money is received and the payment is posted, then at the end of the day all the statements should be sent out on a daily basis. This is staggering the statements so you don’t have a bunch going out at once and then get an influx of patients calling at one time.”
Patients need to see their balances as quickly as possible so they can pay.
• Staffing. This could be 1.5 full-time equivalents per 1,000 cases, Gaddie says. “This can be controversial,” she notes. “It’s an industry standard, but at the same time you have to focus on your specific surgery center and what kind of cases you’re handling.”
Whether an ASC handles single specialty GI, orthopedic, or neuro cases can make a difference in staffing. “Staffing is a good KPI to look at, but you should know that it may vary depending on your surgery center,” Gaddie says.
Key performance indicators make it clear what expectations are. Tracking this information keeps surgery center staff accountable and motivated.
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